Business | Economy

Gold rises for third day

Investors have been waiting for bolder moves by the ECB after President Mario Draghi

  • Reuters
  • Published: 14:51 August 17, 2012
  • Gulf News

  • Image Credit: REUTERS
  • An employee holds a gold piece, each weighing 100 grams, at the state-owned mining company PT Antam Tbk metal refinery in Jakarta.

Singapore: Gold extended on Friday gains from the previous session, when it rose the most in two weeks on German Chancellor Angela Merkel’s support for more action by the European Central Bank to fight the bloc’s debt crisis.

Investors have been waiting for bolder moves by the ECB after President Mario Draghi said last month the bank would do everything in its power to hold the euro zone together, although a subsequent ECB meeting yielded few concrete measures.

Merkel’s support for Draghi injected confidence into the market and raised hopes that European leaders may eventually come up with a solution to the crisis, now in its third year, spurring investors to buy riskier assets.

Gold’s fate largely hinges on central bank attitudes towards further monetary easing, especially as physical demand slumped globally, led by top consumers India and China.

“The market is still moving on changing expectations of central bank actions, and is so far unwilling to push prices out of the $1,590 to $1,630 range,” said Nick Trevethan, a senior commodity strategist at ANZ in Singapore.

The seesawing pattern is likely to extend to at least the end of August, when comments by US Federal Reserve Chairman Ben Bernanke at the Fed symposium at Jackson Hole, Wyoming may shed light on the central bank’s next easing move, he added.

Spot gold inched up 0.2 per cent to $1,617.66 an ounce by 0703 GMT but was on course for a weekly loss of 0.1 per cent despite posting in the previous session its biggest one-day gain in two weeks. This is gold’s third session of gains.

The US gold futures contract for December delivery was little changed at $1,620.

Recent US data continued to show a mixed picture of the economy. A trend measure of Americans signing up for new jobless benefits fell close to a four-year low last week, but weakness in a regional factory gauge showed the US recovery still faces an uphill climb.

GOLD-PLATINUM PREMIUM SHRINKS

Gold’s premium to platinum fell to below $172 an ounce, its lowest in nearly a month, after platinum prices jumped after clashes in Lonmin’s Marikana platinum mine in South Africa.

 

Spot platinum hit $1,447, its highest since July 7, after rising more than 3 per cent in the previous session. The metal, mainly used to produce jewellery and autocatalysts, was headed for a weekly rise of 3 per cent, the most in two months.

In industry news, Barrick Gold Corp, the world’s top gold miner, is in talks to sell all or part of its stake in its African arm to China Gold Group Corp, China’s top gold producer.

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